The Hindu Business Line : Sah Petroleum eyeing 36 pc topline growth

SAH Petroleum, manufacturer of industrial and automotive lubricants and greases of various types, is looking at a 36 per cent topline growth this fiscal.

The company has targeted sales of Rs 115 crore for 2005-06 against Rs 84 crore last year.

The company has emerged bigger and stronger every time it has been written off, said Mr Aditya Sah, Joint Managing Director of Sah Petroleum. The fact that it is in a niche product category has helped immensely, he said.

"We believe in optimised performance and we can give 10 different products for 10 different machines of the same type. Industries have recognised our competence and they keep coming back to us," Mr Sah said.

In the wake of oil price fluctuations, the company has taken to hedging during the past few months. "This has paid rich dividends, particularly in the last two months. Our profit in 2004-05 dipped to Rs 6.51 crore from Rs 8.04 crore in 2003-04 mainly because of fluctuation in oil prices," he said.

The company is averse to price fluctuations and not to price rise, he added.

Mr Sah said that it was easier to pass on the price rise to the clients as the lubricant industry is quality sensitive and not too price sensitive. "There is no way any one can replace our products. As replacement one will have to buy standard products offered by the big PSU oil companies, and changing oil is difficult in industries," he said.

The company, which caters to various sectors such as steel, automotive, sugar, glass, cement and textile among others, is not looking to add any new blending plant in the near future. But they are considering capacity enhancement.

The company's Vasai plant, which is nearly 25 years old, will undergo modernisation though there is no such plan for the Daman plant. "It is not worth investing in the Daman plant since benefits accruing out of Daman being a Union Territory will cease to exist five years from now," Mr Sah said.

Sah Petroleum, which currently exports four per cent of its total production, hopes to double its exports in the current fiscal. The exports are mainly to West Asia, Sri Lanka, and Vietnam. It wants to add eastern Africa, Indonesia and a few other Afro-Asian countries to this list.

"Exports are viable only if they are made to places near India, otherwise the freight component becomes too high. This is also the precise reason why US- or UK-based companies do not export to India," Mr Sah said.

Sah Petroleum is in a low volume, high margin segment and has already seen its sales grow by 50 per cent over the previous year. The company is considering technology transfer from the US, though it may take a while.

The company plans to introduce non-carcinogenic and biodegradable products in the near future.

Sah Petroleum share prices dipped marginally on the BSE, losing Rs 2.45 from Friday's opening of Rs 38.70 to close at Rs 36.25.

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